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If You’re a Small Business, You Need Employment Practices Liability Insurance (EPLI).

By M. Wyzanski

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Question: What’s an employer more likley to get a claim for – employment or property/general liability?

Statistics point to the fact that a business owner is more prone to having an employment claim than a property or general liability claim. Statistics further highlight that 41% of all employment claims are aimed at small business employers with 15-100 employees.

Though many employers think they are covered for employee related claims by their general liability policy or workers comp, nothing could be further from the truth. In addition, Directors & Officers, or D&O, and Errors & Omissions, or E&O, only protect businesses from claims stemming from those not employed by the company.

While every business looks for cost-effective ways to manage their operation, those who opt not to get EPLI may be playing with the fire of a greater expense. In fact, the U.S. Department of Labor estimates that as many as 70% of employers fail to be in full compliance with the Fair Labor Standards (FLSA).

Ask yourself: is doing without EPLI worth the risk?

Employment Claim: The expensive consequences

Out-of-court settlement cost average amount: $40,000

Typical cost for EPLI defense: above $45,000

Standard compensation award: $218,000

Percentage of employment cases that litigate results for plaintiff: 67

Percentage of awards in cases for work discrimination and wrongful termination of employment above $1,000,000: 10

Employers that have been subject to employee suits within the past 5 years: 6 out of 10

From the files of PRIME Insurance

Claim Examples:

A mortgage company was sued by 54 of its loan officers for more than $220,000 in unpaid overtime. The employer mistakenly thought FLSA did not apply to highly compensated workers. Many of his staff earned well above $150,000 a year and the average compensation was $105,000. There is an exception to the FLSA law for highly paid individuals earning $100,000 or more per year. But that exception also stipulates that a minimum of $455 per week must be paid. As it happened, these employees were not paid during weeks where they did not close loans.

47 client technical support employees sued a local community bank a short while after the bank reclassified these workers as non-exempt. The bank offered each employee 2 years of pay back for the overtime they were not paid. Despite this, the employees were not happy with the decision and took legal action. They were granted 3 years of back overtime pay and liquidated damages for the intentional misclassification. The total payout was over $172,000.

A grocery store was told to pay over $52,000 in restitution to 13 workers – all under the age of 16 – for willful violations of the FLSA youth employment provisions. The food market had minors working 6 consecutive hour shifts, as well as performing tasks, such as, cleaning a meat slicer, loading a paper baler, and operating the power-driven baking machine. These specific activities are identified as hazardous orders that are prohibited for workers under 18. In addition, the FLSA limits the number of hours that minors may work on school days or weeks.

An EPLI plan can safeguard and cover your business for the steep price of claims, while providing legal defense aid.

PRIME Insurance presents superior EPLI coverage

Providing essential protection against lawsuit claims made by present, past and potential employers, as well as guests, this form of insurance is a must for any employer. It covers the broad range of claims that are based on:

Discrimination

Wrongful termination

Sexual harassment

Service refusal

Other allegations related to employment

Prime Insurance is a three-generation family-run independent agency. We’re proud partners with some of the most powerful companies in the industry – big names such as ACE, ASI, ASSURANT, CHUBB, FOREMOST, Liberty Mutual, MetLife, PROGRESSIVE, Safeco, StillWater, Travelers, USLI, ZURICH and more. With over 10,000 satisfied customers – including truckers, we benefit policyholders by reviewing current coverage, as well as by shopping our wide network to locate customized policies at competitively lowest quotes.

Summary: It may come as a surprise that 41% of all employee related insurance claims are aimed at small business employers. With this type of suit as the leading claim against business owners, it stands to reason that EPLI is a must. Discover how PRIME Insurance can help you with just the right policy.

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